How Much Is That Dulcimer in the Window?

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All that glitters is not gold — because antiques and ageless instruments may have a valuable shine of their own as investments.

The great sages knew a thing or two about investing. We may not know where the Sanhedrin stored their shekels or which mutual fund Maimonides would recommend, but the Talmud clearly spells out a strategy: diversify.

According to Nezikin (Damages, or Torts), we’re supposed to divide our assets into thirds, with two portions allotted for land and business and one kept liquid. (There’s even a debate over whether “land” means investing in real estate or actually burying money in the ground. Some years it’s probably a toss- up.) But there are additional options beyond those three categories. Have you considered a Chippendale settee?

“There are no guarantees for anything you invest in, but antique furniture, historically, has been very steady,” says Frank Levy, a fourth-generation antiques dealer. “And as far as investments go, the nice thing is it’s an investment you can use and enjoy.”

Levy is a partner at Bernard & S. Dean Levy, which started on New York’s Lower East Side at the turn of the last century and specializes in American furniture. And although he’s a New Yorker, Levy points out that early pieces from Philadelphia are “substantially more valuable” than those from his hometown — not that we’re competing. He’ll head here in April to show off his wares at the Philadelphia Antiques Show.

In terms of value, furniture from the 1730s up to the American Revolution — the Queen Anne and Chippendale periods — has held steadiest over the years, Levy says, which means items in decent condition from that time frame are probably your best bet if you’re looking for an investment piece.

Of course, it also means they’re more expensive to purchase. But prices as a whole are down right now, Levy says: “It’s a really good time to buy. You could put together a good collection for a percentage of what you would have paid 10 years ago.”

Also popular, though less so, are the more delicate furnishings of the Federal period (after the Revolution until around 1825). “It’s very attractive stuff,” Levy says, “and I think it has a chance to pick up.”

Not only have these pieces been around for a while, but the practice of investing in them has, too.

“Alternative investments are a really hot area, but a really old area as well,” predating stocks and bonds, says professor Chris Geczy, director of the Wealth Management Initiative at Wharton.

Geczy, who frequently advises clients on alternative investments, cites diversification as the “palpable benefit” of adding things like antiques, stamps, and rare coins to your financial portfolio, because returns over time are different from other investment classes.

“If you split your eggs across baskets, you’re not going to drop them all at once,” he says.

(One exception might be fine art, which appears to be correlated to stock market performance. It has “kept pace with the stock market,” Geczy explains, “but the point is to do something different from the stock market.”)

Illiquidity and the difficulty of valuation are the main risks of offbeat investments, Geczy says in fluent Wharton-speak. In other words, that Chippendale settee might be hard to unload quickly if you need cash in a hurry and, even if you find a buyer, you need a good amount of subject-specific knowledge to recognize whether you’re getting a fair price.

Other downsides include the risk of damage to your collection and, in some cases, the issue of scarcity. Geczy uses Beanie Babies, the popular stuffed animal that was a hit with collectors in the 1990s, as an example. The manufacturer limited production, keeping the toys relatively rare — but if the company decided to make more, existing Beanie Babies would likely lose value.

That said, the “psychic benefits” — the pleasure of consumption — shouldn’t be discounted. “It all comes down to the perceived benefit. Part of the pleasure is becoming an expert and knowing about what you own,” Geczy says.

Fred Oster of Vintage Instruments agrees. Oster, who opened the Center City shop in 1974 and has appeared on Antiques Roadshow, sells old and antique acoustic instruments. Most of his clients are musicians who plan to put the instruments to use. “As investments, instruments are not necessarily better than anything else. But people buy them because they like them,” he says.

Playing an antique violin or banjo doesn’t automatically downgrade the value the way using a different kind of antique might; in fact, it’s good for the sound. The exceptions are some extremely rare, historically important instruments that get top marks for maker, provenance, condition and originality. With one of those, Oster says, “you probably don’t want to schlep it around and play it.”

Violin values have proven the most constant over the years, with acoustic guitars coming in second, though, like with most things, it depends on the mood of the market, he says.

Either way, as with antiques or art, you still get those psychic benefits. “They provide tangible pleasure. With artwork, for example, you can put it on the wall and enjoy it,” says Geczy of Wharton. “Most people don’t hang stocks on the wall. You don’t say, ‘Come look at my beautiful mutual fund.’ ”

Rachel Vigoda has written for papers and publications throughout the region on a variety of topics. This article originally appeared in "Financial Health," a special section.